LONDON, March 28 (Reuters) - Global bond yields continued to spiral lower on Thursday as recession fears fed expectations of more policy easing by major central banks, while Turkey's lira took a 5 percent beating as pressure ratcheted up on its volatile markets.

Most heavyweight share markets did manage to steady, but with the end of what has been rollercoaster first quarter of the year approaching for traders, there was plenty to try and keep track of.

Confidence indicators were tumbling again and sterling was hit by a bout of Brexit blues after a round of "indicative votes" in the UK parliament failed to produce any new plan to manage its divorce from the EU.

A Reuters report that the United States and China had made progress in all areas in trade talks seemed to bolster sentiment a little, though sticking points remain and there is no definite timetable for a deal.

E-Mini futures for the S&P 500 seemed uncertain which way New York would go later and Europe was in the process of giving back its early gains with only London's FTSE still clinging to positive territory at the midsession mark.

Credit rating firm S&P Global became the latest to chop its euro zone growth forecasts and Tokyo's Nikkei marred a modest recovery by much of the rest of Asia overnight by tanking 1.6 percent..

Worries that the inversion of the U.S. Treasury curve signalled a future recession only deepened as 10-year yields fell to a fresh 15-month low at 2.34 percent. It had ticked back up to 2.36 percent ahead of U.S. trading but the signals were clear.

"Basically we have got an unstable and nervous market," said BlueBay Asset Management's head of credit strategy David Riley.

"If safe government bond yields continue to fall I think that is a backdrop that equity markets will find hard to ignore," though he added he doubted that there would be as many U.S. rate cuts as traders are now pricing in.

The latest lunge lower in German bunds yields appeared to have eased at least, having dived deeper into negative territory on Wednesday after European Central Bank President Mario Draghi said a hike in interest rates could be further delayed.

Plans to mitigate the side-effects of negative interest rates could also be considered, suggesting the central bank was preparing for an extended period below zero.

That shift also came hot on the heels of a dovish surprise from the Reserve Bank of New Zealand, which abandoned its neutral bias to say the next rate move would likely be down.

Yields in both New Zealand and neighbour Australia, sank to record lows in response.

LIRA FREEFALL

The day's real fireworks were from Turkey's lira, one of the currencies at the heart of last year's emerging market meltdown.

It plunged as much as 5 percent against the dollar as authorities showed the first sign of easing a draconian squeeze they had put on international lira traders in recent days that was designed to prevent the currency spoiling local elections this weekend.

It did ease some of the intense pressure on the government's bonds but a day after the country's stock market had also slumped, there wasn't much good will out there.

Ugras Ulku at the International Institute of Finance in Washington said the question was, when the dust settles, whether portfolio managers want to continue to invest in Turkey or not. "We will have to wait and see," he said.

Elsewhere, New Zealand's rate cut hints had the desired effect on its currency, which was pinned at $0.6801 after diving 1.6 percent overnight. The Aussie was on the defensive at $0.7090.

Draghi's comments likewise kept the euro back at $1.1225 , and left the U.S. dollar 0.4 percent firmer against a basket of its competitors at 97.143.

Only the yen held its own thanks to its safe-haven status and firmed to 110.34 per dollar.

Sterling had its own troubles as an offer by beleaguered British Prime Minister Theresa May to resign to get her European Union deal through parliament failed, leaving uncertainty hanging over the Brexit process.

That left the pound down at $1.3121 and heading for its first monthly fall since November.

In commodity markets, palladium was the focus of attention after sliding 7 percent on Wednesday as its meteoric rally finally ran into profit-taking. It was down 3.5 percent on Thursday.